It was previously called 2. deild and has been known as 1. deild since 2005, because the top division was renamed Formuladeildin for sponsorship reasons.
It currently has 10 participating clubs. At the end of each season, two teams are relegated and two promoted from what is now the Second Division, pending the fact that the winning team in any given division does not already have a senior team in the division it is being promoted to. In such cases the team that finished second will be promoted in its stead. If a team is relegated to a division where one of its teams are already playing, the second best team will move one division down, thereby saving another team from relegation.
The league was founded in 1943 and was named Meðaldeildin (The Middle Division): this was 1 year after the founding of the First Division (Meistaradeildin). There was no promotion and relegation system at the time, and the two leagues operated separately from each other. This was partly because Meðaldeildin was mostly made up of B teams from the clubs in the Meistaradeildin. One year after all leagues had to be suspended due to the occupation of the Faroe Islands by the British Army. The league then resumed the season after. From 1943 to 1975 it was called Meðaldeildin, then the league structure changed in 1976. The Meistaradeildin was renamed 1. deild and the Meðaldeildin was renamed 2. deild. Also from that season onwards, the top clubs in 2. deild were promoted to 1. deild. The first club to be promoted was Fram Tórshavn after they won the division for the first time in their history, though they finished bottom of 1. deild the following season and were relegated back into 2. deild. The latest change to the league was made in 2005, when 1. deild was renamed as Formuladeildin for sponsorship reasons; 2. Deild adopted the name of 1. Deild; the third tier was renamed 2. Deild and the fourth tier became 3. Deild.